Uber Reaches Agreement With NY on Surge Pricing During Emergencies

The New York state attorney general said Tuesday that he had reached an agreement with Uber, the car-summoning startup, that would limit the cost of using the company's service when used during emergencies.

The startup, which allows users to hail a private car service with a smartphone, relies on what it calls a surge pricing model; the cost of rides increases during periods of high demand. Surge prices can often reach two to three times the normal cost of an Uber fare.

The new agreement, according to the attorney general's office, would cap Uber's surge prices during "abnormal disruptions of the market," typically citywide emergencies, in accordance with New York City's anti-price-gouging law, passed in 1978.

"It provides consumers with critical protections to which they are entitled under the law - and it provides Uber with clarity from government about how the law will be applied to its innovative pricing model," state Attorney General Eric T. Schneiderman said in a statement.

Nearly two years ago, Uber faced a public outcry when it applied surge pricing during Hurricane Sandy, the storm that left thousands of New Yorkers without power or transportation for days. Many people accused the company of price gouging during the storm.

In an op-ed column in The New York Times in April, Schneiderman wrote: "The ability to pay truly exorbitant prices shouldn't determine someone's ability to get critical goods and services when they're in short supply in an emergency."

Uber expects to announce a similar agreement for its surge pricing model during emergencies for the rest of the country, according to the attorney general's announcement.

© 2014 New York Times News Service